The debate on industrial policies still faces controversies, in particular on market failure versus government failure, but the key question is no longer whether industrial policies should be applied, but how much intervention and what instruments should be applied in a particular context. The challenge lies in finding the right balance between “doing too little” and “intervening too much”. In this context, many Governments need to strengthen industrial policy-making capabilities. Four dimensions of industrial policy management capabilities are discussed. It is difficult to draw generalizable lessons from the Asian and African experiences as they are very heterogeneous, and the presentation therefore makes the distinction between emerging economies with fairly competitive firms and fairly capable governments on the one hand, and the typical low-income countries, ranking low on governance indicators. Emerging countries have shown that catching up is possible; they have selected country-specific pathways and developed national visions as well as pro-active and targeted industrial policies. Strong regional spillovers, the emergence of regional production networks and new challenge for technological learning are discussed. In contrast, experience from low income countries shows that these countries have different priorities for industrial policies when compared to emerging countries. They demonstrate less favourable conditions for private sector development, they are weak on all dimensions of industrial policy management capabilities, and few countries have a clearly defined vision and “national project”.

Workshop on "Boosting economic dynamics and job growth: the potential of industrial policies" organized by the ILO and the Geneva Office of the Friedrich Ebert Foundation (FES) 4-5 March 2013.